The California prison system canceled this week its contract with a prison staffing firm co-owned by Sen. Mimi Walters' husband after the state received multiple complaints that the company wasn't paying its subcontractors.

In June, the Watchdog, along with the Los Angeles Times, reported that several dentists and pharmacists who subcontract with two companies co-owned by David Walters hadn't been paid for their work in California prisons.

One of the firms was Drug Consultants, Inc., which was told in a letter dated Wednesday that its contract was being terminated.

From July 2003 through last February, the state prison system paid Drug Consultants Inc. $61.8 million, according to records the department provided the Register.

The department paid a second company controlled by Walters' husband, American Healthcare Recruiting, $15.6 million over the same period.

CCHCS also recently received a public records request from a registry nurse provider claiming she had not been paid for services rendered in June and July by DCI and requested status of payment from CCHCS to DCI for these two months. We also received communication from a registry nurse declining to perform further services at a CDCR facility due to non-payment by DCI. DCI's adoption of management practices to forgo payment to some of its registry personnel, as evidenced by the multiple credible claims received by CCHCS, is interfering with the delivery of services provided under this Agreement.

The letter goes on to say that Drug Consultants, Inc. has failed "to respond to multiple requests" to provide financial documents. Carroll writes that this failure leaves the state to make conclusions about Drug Consultants, Inc. financial condition based on its "continued pattern" of not paying subcontractors and its recent downsizing of its offices.

"These factors indicate an unstable financial condition," Carroll writes. "DCI's current financial condition combined with its adoption of management practices to not pay some of its registry personnel, have interfered with the delivery of services."

The Watchdog called Keith Moore, a director of Drug Consultants, for comment, but he hasn't responded. David Walters also hasn't responded to a voicemail seeking comment.

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